Good Day Traders,
Nice to be back home after spending the week with my mom. Saturday I attended an all-day Technical Analysis Conference at Golden Gate University highlighting the Wyckoff method of technical analysis. Good session with several notable speakers including Linda Raschke a prominent trader. It’s always good to keep sharpening the saw and this was very good conference.
Thanks for all the great comments about the ATTS service and the “How to Make Money Trading Stocks” webinar that blast out every Friday at 10 a.m. Pacific. Please let others know about this great webinar! You can either join live or catch the replay on YouTube.
Here’s the link for next Friday’s Show: https://attendee.gotowebinar.com/register/5718294262785430017
For Premium Members our Wednesday evening training is developing some fantastic traders!
Mid-Week Market Sanity Check Topic: Moving Average Refinements & Patterns
General Market Observation: The tracking indexes are showing different levels of power and momentum, or lack thereof. From the sloppiness of the S&P to the more orderly nature of the NASDAQ 100 and Russell, each index continues to live within trading ranges since the beginning of the year. Per this weekend’s Market Pulse, Distribution days on the S&P are growing and on the NDX they are shrinking. We see this in the price action differences seen between the two indexes. Remember that the number of stocks above their 20 day moving average continues to be weak and provide a headwind against any large price advance.
SPX: The S&P has been stuck in one of two ranges since the beginning of year. The first five weeks of the year the range was 1983 up to 2050. Then in February the range stepped up and now price action bounce between the 2050 and 2125 levels. On a daily chart the price action has been very wide, lose and directionless. The best way to trade this index continues to be buy at support and sell at resistance or weakness. On the SPY the same trading ranges equates to $7.00 which is a good move for the patient. Minor levels of support and resistance do show up within the range which must be planned for but there is still room for quick trading between the major support and resistance levels. The weekly chart below highlights the price range boundaries well. Price becomes interesting at the boundaries!
Preferred ETF’s: SPY and UPRO or SPXL
NDX: Price action continued to function in a short term downtrend within a longer term uptrend. Like the S&P prices finished in no-man’s land with no set up immediately for next week. The 4500 level if functioning as a line of demarcation on trades but given the current candle shapes on the daily little can be down trading wise unless a trader is willing to just target shoot a support levels. The weekly chart looks a more constructive with last week’s candle finishing as a bullish reversal Hammer. Price is just a little over 6% away from the all-time high on this index set back in 2000. A reversal and thrust up could make an interesting climax run before turning over. Clearly the NDX is trying to digest gains from the last surge up that started on 7-9-15. At this point the NDX is the strongest of the Tracking Indexes.
Preferred ETF’s: QQQ and TQQQ
RUT: The Russell has the most overhead resistance to breakthrough on a rally attempt. Price action found support at 1190 and reversed on Wednesday. Last week’s candle finished as a dragon fly doji bullish harami reversal candle that could have marked out a bottom for the current down move. A rebound rally this week would not be a surprise with an upside target of being the 100 day moving averages. The 100 day moving average is currently at 1239. Any test between 1205 and 1190 may provide a long opportunity just as a retest at the 100 day may provide a short opportunity.
Preferred ETF’s: IWM and TNA
The Early Warning Alert Service has hit all three major market trading point this year. See this brief update video for more details: https://youtu.be/PRLmPQLHjiI
If simplifying your life by trading along with us using the index ETF is of interest you can get the full background video at: http://activetrendtrading.com/etf-early-warning-alerts-video/
The How to Make Money Trading Stock Show—Free Webinar every Friday at 10 a.m. PDT. This weekly live and recorded webinar helped traders find great stocks and ETF’s to trade with excellent timing and helped them stay out of the market during times of weakness.
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Index Returns YTD 2015
ATTS Returns for 2015 through Aug 14, 2015
Margin Account = +4.0% (Includes profit in open positions)
Early Warning Alerts = +3.38%
Active Trend Trading’s Yearly Objectives:
- Yearly Return of 40%
- 60% Winning Trades
For a complete view of specific trades closed visit the website at: http://activetrendtrading.com/current-positions/
Updated at the beginning of each month.
Managing Existing Trades: Currently no trades open in Strategy 1 or 2.
Special Trades: Wealth & Income Generation Strategy 3 Trades: Sold 7 contracts or Aug 15 IWM 121.5C calls at 0.48 Friday. This provides a potential $366 in income for this week. Will close or roll this position no later than Thursday or Friday of next week. Last week this trade generated $299 in income which equates to $42 per long contract held. We want to watch support and resistance bounces for opening the Put leg of this week’s trade.
I posted a video about how to choose the weekly options to short for this strategy. It can be viewed at: http://activetrendtrading.com/videos/
Additionally some of these trade may be selling weekly puts on up trending stocks. If you are interested in parallel trading this strategy register at this link: http://forms.aweber.com/form/99/1278533099.htm
Pre-Earnings Trade: No Pre-Earnings Trades.
Potential Set Ups for this week: With the volatility and negative tone of this week several stocks held up well and stayed within tight consolidation patterns. I will be highlighting several stocks through the week and providing a better projection of where it will be a potential buy. This will help with your planning moving forward.
Upside: Stocks with sound upside potential include, CELG, CAVM, INCY (at 101), TSEM (at 14.25), FIT and AET.
Downside: Both SWKS and AFSI are looking weak.
Toss Ups: Several stocks are posturing for either a move up or down. These include TSLA, AMBA (Earnings 9-1 AMC), GPRO, FB, LNKD, FEYE, CYBR (buy with a bounce at 55), VDSI, and ANET (interesting at 78).
Leveraged Index ETFs: Waiting for either a reset or secondary entry for the Early Warning Alerts.
Outs & Ins: Both CDNS and GPN make their debut on this weekend’s IBD 50 list. Both are extended from breakouts and need to form entry patterns for consideration. AMBA fell out of the top position on the IBD 50 and has earnings coming up on 9/1. CAVM, AET and FB look interesting and need to show a good entry set up.
Comments and opinions written below this line of text may be provocative and only obliquely related to trading. Some may find these “Off the Wall” comments challenging to their outlook on life. I will not post any comments made on subject matter below this line, so if you disagree blast away.
OFF THE WALL
Off the Wall: Keep Sharpening the Saw! I like presentations from fellow traders who have been battle tested and survived. This past weekend’s conference provided everyone from academics to practitioners covering trading theory to application. Of course there is always a bit of a gap between the principles shown in theory and execution in practice. A few of the nuggets I’ll tuck away include:
It’s paramount to continue refining the process.
I have the right to revise.
Think in Waves.
Trends exist in all time frames! Know when they are in and out of synch.
There is no perfect answer.
Stop caring about where price might go and focus on the cue.
Tools train the eye.
Each chart provides a framework to understand the structure of price action.
Lastly last three main points:
- Study the swings
- Know the overall market posture
- Perfect my ability to concentrate—Distraction takes away from the technical!
Share Your Success: Many of you have sent me notes regarding the success you are having with the Active Trend Trading System. Please send your stories to me at firstname.lastname@example.org or leave a post on the website. Thanks.